Compare this to the article I posted in this thread previously. (Updates with dropped analyst rating in 10th paragraph.)
By Ye Xie
May 15 (Bloomberg) -- NQ Mobile Inc., the Chinese mobile-
service provider accused by short seller Carson Block of
overstating revenue, dropped as much as 30 percent after
delaying the filing of its annual report for the second time.
American depositary receipts of NQ Mobile fell to $7.62 at
1:02 p.m. in New York, their lowest level in 10 months. The
shares have tumbled 68 percent since Block, founder of Muddy
Waters LLC, said in October the Beijing-based company was “a
massive fraud.” NQ Mobile has denied the allegation and said
today that it is working to file its audited full-year results
to U.S. regulators as soon as possible.
“No data is negative data,” Sachin Shah, a special
situations and merger arbitrage strategist at Albert Fried & Co.
in New York, said in a phone interview. “I am surprised by
their comments that they need more time. It further undermines
their credibility.”
The company on April 30 delayed the filing of its audited
annual report, known as a 20-F, by 15 days as it waits for the
final results of an investigation into Block’s allegations. The
company said at the time it doesn’t anticipate any changes to
its previously reported financial results and didn’t provide an
update on the investigation in today’s statement.
No Filing
“The company is unable to file on time its annual report
on Form 20-F because it needs additional time to complete it,”
Beijing-based NQ Mobile said in its statement today. “The
company continues to work to file its annual report for the year
ended December 31, 2013 as soon as possible.”
Investors have been waiting for the result from the
investigation led by law firm Shearman & Sterling LLP and
auditor Deloitte & Touche Financial Advisory Services Ltd. as a
ruling on whether Block’s assertion that NQ Mobile
misrepresented its financials has merit.
Block, who has become known over the past years for
exposing illicit practices in Chinese companies, didn’t respond
to a request for comment on the filing delay.PricewaterhouseCoopers Zhong Tian is the regular auditor for NQ
Mobile. Christopher Atkins, a spokesman for PwC in New York,
didn’t return a phone call seeking comment.
NQ Mobile is still working with auditors on a review of its
financial statements, which “has thus far found no incident of
fraud” and is “nearing its conclusion,” Kim Titus, a
spokesman for the company, wrote today in an e-mailed statement.
Canaccord Genuity Corp., one of three research firms which
this year have recommended that investors buy NQ Mobile shares,
said today that it is suspending its rating and price target on
the stock.
“Given NQ’s failure to file its annual report on Form 20-
F, we no longer have a reasonable basis for formulating our
estimates and therefore suspend our estimates,” Michael
Walkley, an analyst at the firm wrote in a note today.
